Philip Esformes, of Miami owners of more than 30 Miami-area skilled nursing and assisted living facilities, a hospital administrator and a physician’s assistant were charged with conspiracy, obstruction, money laundering and health care fraud in connection with a $1 billion scheme involving numerous Miami-based health care providers. According to the indictment, Esformes operated a network of over 30 skilled nursing homes and assisted living facilities (the Esformes Network), which gave him access to thousands of Medicare and Medicaid beneficiaries. Many of these beneficiaries did not qualify for skilled nursing home care or for placement in an assisted living facility; however, Esformes and his co-conspirators nevertheless admitted them to Esformes Network facilities where the beneficiaries received medically unnecessary services that were billed to Medicare and Medicaid. Esformes and his co-conspirators are also alleged to have further enriched themselves by receiving kickbacks in order to steer these beneficiaries to other health care providers – including community mental health centers and home health care providers – who also performed medically unnecessary treatments that were billed to Medicare and Medicaid. In order to hide the kickbacks from law enforcement, these kickbacks were often paid in cash, or were disguised as payments to charitable donations, payments for services and sham lease payments, court documents allege.

According to court documents, in 2006, Esformes paid $15.4 million to resolve civil federal health care fraud claims for essentially identical conduct, namely unnecessarily admitting patients from his assisted living facilities into a Miami-area hospital. However, Esformes and his co-conspirators allegedly continued this criminal activity-adapting their scheme to prevent detection and continue their fraud after the civil settlement. The indictment alleges that the co-conspirators accomplished this by employing sophisticated money laundering techniques in order to hide the scheme and Esformes’ identify from investigators. The FBI and HHS-OIG ultimately employed advanced data analysis and forensic accounting techniques and were able to identify the full scope of the fraud scheme.

Jeffrey Newman represents whistleblowers in cases across the country. He represents whistleblowers Janet Halpin and Shawn Fahey in the RehabCare/Kindred case which settled this year for $125 Million.